Can businesses survive if TikTok is banned?

As the government moves forward with legislation that could potentially ban TikTok across the United States, concerns are growing about the impact this will have on businesses.

A bill signed by President Joe Biden in April requires TikTok's Chinese parent company ByteDance to sell its stake within the next year, citing national security concerns related to user data. TikTok rejected these concerns.

With over 150 million users in the US alone, the app has become an essential platform for businesses, especially small and medium-sized enterprises (SMEs), to reach customers and increase sales.

According to TikTok data released in March 2024, more than 7 million small businesses in the United States use the platform. The company reported that these businesses generated $14.7 billion in revenue in 2023 and contributed $24.2 billion to U.S. gross domestic product (GDP) over the same schedule.

According to the report, 39% of small businesses said access to TikTok was essential to their business, and 69% said the platform led to increased sales in the last year.

TikTok's importance to business is not limited to the United States. Earlier this year, the platform reported that it contributed 4.8 billion euros ($5.1 billion) to the gross domestic product (GDP) of several European countries last year.

In response to the potential ban, TikTok said in a video statement on its platform that it has spent “billions of dollars” protecting user data and will “continue to fight” for its users' rights in court.

Meanwhile, experts have warned that the ban could have far-reaching implications for U.S. companies. Danish Shah, a marketing professor at Georgia State University's Robinson College of Business, said: newsweek: “TikTok serves as an important channel for acquiring and retaining customers and promoting your products and services.”

Paul Tran, co-founder of skincare brand Love & Pebble, said: newsweek: “A ban on TikTok would have a devastating impact on our business. 90% of our sales come from the platform.”

Love & Pebble, which has been building a platform on TikTok for the past few years, uses the social media app to naturally reach customers and share their stories.

”[A] Banning TikTok would essentially destroy the American Dream that we have worked so hard to achieve,” Tran said.

Content creators and influencers on the platform are also concerned about the future of their personal brands if the ban goes into effect, but experts believe there is hope.

said Michael Jaconi, co-founder and CEO of mobile commerce platform Button. newsweek: “If a ban were to occur, some creators would see a temporary reduction in income, but I don't think it's likely to be a long-term problem.”

Meanwhile, Shah explained that companies have an opportunity to think about how to respond to the ban. “The good news is that companies have plenty of time to pivot to other platforms,” ​​he said.

“At a more fundamental level, TikTok represents the popularity of short-form videos that consumers love to watch. It’s an obvious platform for businesses to move to. [to] For short-form videos, these are Instagram Reels and YouTube Shorts. ”

“There will be some pain in the short term, but I think companies will be able to manage the transition to alternative short-form video platforms relatively easily,” Shah added.

As for contingency plans, Tran said Love & Pebble could potentially have to move markets. “Our backup plan at the moment is to launch the brand on TikTok in Vietnam, where there are no potential bans in place,” he said.

But despite his ideas on how to lessen the pain of losing the platform that drives the majority of its sales, Tran was clear it would have a long-term negative impact. “A ban on TikTok would destroy our company and our brand and take away all the traction we've gained over the years,” he said.